Hedge Fund Industry Milestones

The hedge fund
industry enjoys high popularity among investors, which is shown by its
estimated value of $1 trillion. There are around 8350 hedge funds that operate
within it. Additionally, the hedge fund industry enjoys an approximate growth
of 20% every year.

Different strategies
can be applied in the hedge fund industry. Some of them include the so called
leveraging and derivatives. However, not all of the hedge funds apply them, which
leads to a more conservative approach toward investing. The use of derivatives
and shorting of equities is commonly used in the industry for the purposes of
reducing the potentially high levels of risk. Additionally, the applied hedge
fund strategies success is independent of the movement of bond or equity
markets. On the other hand, success is dependent on the amount of capital that
can be used before the disappearance of returns. This leads to the imposition
of limits on the amount of capital that can be incorporated.

The dependence on the
services of professional managers or management teams is typical for hedge
funds since most of them possess a high degree of specialization. A general
characteristic of hedge fund managers is their high level of discipline needed
for the field.

The history is full of
examples of hedge funds outperforming traditional equity and bond indexes.
Hedge funds have gained popularity among many endowments and pension funds.